Kasich Signs Lake Erie Water Withdrawal Bill

Ohio Gov. John Kasich (R) has signed legislation establishing the state’s first water withdrawal permit program for Lake Erie. The measure will set withdrawal limits for businesses that want to draw water from Lake Erie, surrounding rivers, and groundwater that feeds the lake.

Long Battle Over

The new law requires businesses to obtain a permit when withdrawing 2.5 million gallons of water or more per day from Lake Erie, 1 million gallons per day from rivers and streams feeding the lake, and 100,000 gallons per day from streams defined as “high quality.”

Kasich’s June 4 signature marked the end of a long battle over water usage from Lake Erie. This was the legislature’s second attempt to pass and implement a Lake Erie water-use bill. Lawmakers passed such a bill last year, but Kasich vetoed it. Kasich and lawmakers found common ground when legislators reduced the amount of water that could be withdrawn without a permit.

Market Mechanisms Ignored

Julian Morris, vice president of research at the Reason Foundation, said the measure looks like an ineffective and inefficient solution to a problem arising from conflicts over the use of water.

“It is ineffective because there will still be conflicts,” Morris said. “The various individuals and groups that claim the rights to use the water—for industrial purposes, recreation, conservation, etc.—have no way to alter subsequent rights through exchanges. As a result, they will continue to be frustrated.

“It is inefficient because the water is being allocated by bureaucratic fiat rather than through market exchanges,” Morris explained.

The legislation brings the state into compliance with the Great Lakes Compact, a binding agreement among the eight Great Lakes states, and was drafted to manage the amount of water withdrawal and limit the amount of water than can be exported outside the region.

Morris said the permit process will fail without market mechanisms.

“The underlying problem is the lack of clearly defined, readily enforceable and transferable rights to water. The permit system actually makes this problem worse by creating a requirement that abstractions be subject to arbitrary permit restrictions,” he said.

Market Solution Outlined

Morris outlined a market solution to managing water withdrawal from the fresh lakes.

“The solution to the problem is to create clearly defined, readily enforceable and transferable rights to the water. In principle it matters little who receives those rights, as long as they can be transferred without bureaucratic intervention. If politicians want to placate various interest groups, one way to do that would be to allocate rights in an evenhanded way to various individuals and groups with strong legitimate claims.

“Again, as long as those rights are clearly defined and readily transferable, then those individuals and groups who value the water most should be able to express that by purchasing additional rights from those who value the water less. That would result in a more efficient, more effective, and more equitable solution,” Morris said.